Medical Financial Assistance supported by the World Bank and UK (1998–2007)

The context of sustaining MFA of the BHSP was challenging yet promising. According to respondents and project documents, while MFA was considered an embodiment of the Bank’s and DFID’s global pro-poor vision [67], it faced difficulties due to the marketization of the health sector since the late 1970s that dismantled the previous health safety nets in the planned economy era, according to respondents. However, the vague nature of China’s 1997 public health reform and the government’s general poverty reduction policies created an opportunity for implementing MFA [55, 67]. As China’s conservative domestic policy-making prioritized social stability and the avoidance of errors [67], the government saw external assistance as a chance to test, adapt, and refine new policies informed by experiences in other settings [56, 68], with MFA supported by the World Bank and the UK as part of this process.

Donors’ insistence on the need-based approach

The Bank and DFID emphasized their roles in the project design, insisting on the need-based approach embodied in the design of the project MFA. According to respondents, the Chinese government opposed using 25% of the Bank credits to finance the “intangible”, “uncertain” MFA (R3-WB and R5-WB), without prior policy experience [55, 69, 70]. Instead, they preferred to use these credits for what they perceived as “more sustainable” (R3-WB)—health facility construction, leading to a near breakdown in negotiations for project design. However, through informal discussions among key health economics experts from the Bank, Chinese experts, and managers, the parties reached a consensus on the importance of testing a government-endorsed medical assistance scheme. As a compromise, MFA was reduced to accounting for 5% of the overall amount and financed by Chinese counterpart funds [69].

“We argued a lot with the government during the project preparation because the government was unwilling to pay for this [medical assistance], taking into account the project’s sustainability when it was over. But we were insistent and firmly believed this was important for China. We then undertook extensive communication efforts to convey the necessity of this demand-side financial reform.” (R3-WB)

The donors’ insistence in the inclusion of MFA was regarded as “farsighted” [55] and realized through donor–recipient collaborative efforts. Supported by the government and local experts, the Bank and DFID conducted studies on the health sector’s needs and the complex context of the country, informing their project design and investment decisions [55, 70]. Domestic experts recalled that the Bank and DFID experts conducted multiple field visits in poverty-stricken areas and actively communicated with the local officials and experts to understand health needs and financial gaps [70]. In addition, having identified the bottlenecks in China’s rural health, the Bank had even tested the idea of MFA in a Bank’s previous maternal and child health project on a smaller scale in China, aiding in understanding MFA implementation [71].

Overall, the respondents described the donors as believing in long-term investment and viewing reforms as an evolutionary process, and this insistence took effect. Respondents noted that despite initial dissatisfaction with a report supported by the Bank criticizing the country’s health financing system around 1995, the government ultimately recognized the emerging health issues and the importance of reform, leading to a positive gesture—the 1997 public health system reform. This reform subsequently paved the way for implementing MFA as a policy pilot:

“In 1997, when the government decided to reform the country’s public health system, the BHSP seamlessly became a national policy pilot instead of swimming against the current, resulting from extensive sector studies carried out over a prolonged period. It is important to note that the Bank’s health projects were not initiated based on the governmen’'s request, but rather as a response to identified needs.” (R5-WB)

“Recipient in the driving seat”

“Recipient in the driving seat” (R8/9-WB) during the implementation phase was commonly emphasized by donor respondents. The respondents reported the partnership between the Bank, DFID, and the government as effective, with regular consultations held through Bank and DFID offices in Beijing [55, 67]. The parties involved had already consented to establish a long-term system to meet the population’s health needs. Therefore, occasional administrative challenges caused by differences in operational cultures were resolved by aligning with decisions made by the government [55]. For example, the Bank accepted the suggestion from a local Chinese technocrat, making sufficient MFA preparation as a condition for activating facility construction in each project county [55]. This suggestion accommodated subnational governments’ preference over facility construction and reluctance to support MFA, facilitating MFA implementation.

“The World Bank, in grasping different aspects of the country’s circumstances and context, relied on local experts and was very pragmatic. Its opinion was not decisive; it instead respected the views of local experts. Once the local situation was well understood, some exploration and pilots would be carried out through the project.” (R15-WB)

The project also adapted to align with the government’s reform agenda, transitioning the project MFA to the national medical assistance program since the government issued its first rural medical assistance policy in 2003 [55, 70, 72]. Donors provided technical support for informing further policy-making through evidence-based research and policy discussions on medical assistance’s financing modalities, procedures, reimbursement standards, and monitoring and evaluation [70], as the following sections indicate.

Long-term local expertise cultivation and knowledge generation

The donor respondents highlighted the role of international–domestic expert pairs that promoted long-term knowledge sharing and mentoring. International experts provided expertise on MFA, while the Chinese counterparts sought to enhance their leadership and technical capacities through technical assistance and international exposure to health policy issues. Domestic MFA experts reported positive, lifelong effects of this partnership, which contributed to mindset changes [55, 70]:

“B [an anonymized Bank medical assistance expert] was an inspirational mentor for medical assistance in China because no one knew what medical assistance was before. B was the original mover and shaker of this idea in China and a practitioner. I associate the transformation of my life with B. One winter, we had an all-night conversation, and B changed my entire career—I devoted it to medical assistance.” (R6-WB)

A DFID-funded Core Supervision Team played a vital role in the BHSP’s paired-up approach, ensuring proper supervision by the Bank and DFID. Made up of three international experts, the team saw itself as a bridge and facilitator, rather than as “technical advisors” [67]. It aimed to help all parties understand policy and implementation issues, resolve conflicts, and assist project counties in making informed decisions on suitable health reform paths [55, 67]. However, there was some resistance from the Chinese counterparts, who perceived the role of international experts as lecturers and advisors. This resistance limited the engagement of international experts with local realities and was considered a drawback of the BHSP [67].

Domestic experts, cultivated through the BHSP, were thus entrusted with determining the relevance of specific project ideas to the local context [67]. According to respondents, the government actively involved domestic MFA experts in formulating the national rural medical assistance policy launched in 2003. In 2004, these experts became the country’s expert panels for national medical assistance, supporting the Ministry of Civil Affairs in developing the Guide for Medical Assistance Implementation in rural areas of China [55]. Compared to domestic officials and administrative staff who participated in the BHSP, these experts were more stable in personnel turnovers and had a greater influence on policy-making:

“C [an anonymized domestic MFA expert] and C’s colleagues, who were still in the health economics academia, had the opportunity to be requested by the national policymakers and contribute their insights and expertise in their professional domain, so that they could shape the policy-making process… Influencing policy has been the most critical long-term impact of the BHSP, and that’s how the project served its function for self-sustaining development.” (R16-WB)

Besides, donors also supported generating evidence-based local knowledge. For example, the Ministry of Health and the Ministry of Civil Affairs identified some operational challenges in implementing the national medical assistance policy issued in 2003. The DFID subsequently organized a series of rural health operational studies to address these challenges, involving the domestic MFA experts, during which the relevant government departments took note of the MFA experience [67, 70]. Additionally, the Bank, DFID, and the government consistently encouraged and supported domestic experts to document their project experiences and publish related research articles and books. Donor and subnational government respondents believed that the generated research was the foundation for the domestic MFA experts’ policy advice in national medical assistance and further contributed to the healthcare reform in 2009, as mentioned below.

Sustaining project legacies through policy discussions

The Bank, DFID and the government co-organized numerous informal and formal inter-ministerial workshops, seminars, and conferences to promote debate and information-sharing among project participants and various ministries involved in the health sector. These ministries included the Ministry of Civil Affairs, which is responsible for national medical assistance [56, 67]. Particularly, after the issue of Decisions on Strengthening Health Work in Rural Areas in late 2002 and the outbreak of the Severe Acute Respiratory Syndrome epidemic in 2003, the agenda advanced by the BHSP project became part of the central focus of the national health policy debate. The Ministry of Health, therefore, actively worked to accelerate BHSP implementation and organized seminars during project supervision missions to facilitate national policy discussions and disseminate project results [55]. Overall, the respondents perceived these policy discussions as integral to the ongoing efforts to inform China’s health system reforms:

“These lively policy debates provided a platform for discussing various policies. The project then happened to align with some policies being considered by the government, which had already been experimented by the project.” (R3-WB)

Around the project’s conclusion, the government invited the Bank to provide consultation for the country’s new master plan of health system reform, which was subsequently launched by the national government in 2009. This plan served as the basis for improving and institutionalizing the medical assistance policy [56]. The government further invited the Bank to participate in the independent mid-term review of the 2009 healthcare reform in 2012 [73]. The respondents and relevant documents [55, 70, 74] have recognized that the project MFA catalyzed the development of the national rural medical assistance program in China. According to domestic respondents, the national program has evolved significantly since its inception. It almost covers the entire population in poverty across the country [75], indicating its broader coverage and impact compared to the project MFA. Furthermore, it has become more institutionalized and standardized, ensuring its sustainability and effectiveness.

HIV/AIDS civil society engagement supported by the Global Fund (2010–2013)

The existing literature indicates that the RCC took place in a context where the Fund-supported programs came into a transitional phase for assuming the financial and political responsibilities of the Chinese counterparts on HIV/AIDS civil society engagement [76]. Previous rounds supported by the Fund facilitated convergence between the Chinese and the global HIV/AIDS paradigm. They facilitated the institutionalization of the role of civil society organizations (CSOs)Footnote 1 in a government-dominated socio-cultural context [54, 77] and empowered emerging CSOs and marginalized and HIV-positive individuals to serve their communities and voice their needs [57, 78]. Moreover, amid rapid private wealth accumulation and social inequity challenges, the government gradually recognized the CSOs’ role in reaching marginalized, HIV-affected populations for health services and embraced international cooperation [79, 80]. This resulted in domestic HIV/AIDS CSOs collaborating with transnational actors and adopting global norms, as highlighted by respondents and existing literature [80].

During the RCC, the Fund sought to solidify its legacies by strengthening civil societies, notably being the most supportive external donor in advancing community-based approaches in China’s HIV/AIDS response [57]. Particularly, it supported a CBO program within RCC from 2012. However, the government became increasingly concerned about political infiltration through externally-endorsed CSOs and prioritized regime security during this period [77, 80, 81]. Respondents also observed that CSOs in China were still in the early stages of development. How the donor and recipient addressed the sustainability challenges of HIV/AIDS civil society engagement thus became a significant concern in this case study.

Inadequate dialogues

Without an in-country office, the Fund communicated with the Chinese counterparts through the Country Coordinating Mechanism (CCM)Footnote 2 and CCM working groups, particularly during the RCC, to engage in dialogues regarding civil society involvement [78]. Unfortunately, this distance-based approach made the donor–recipient dialogues inadequate, leading to misunderstandings, mistrust, and unilateral action (Fig. 2) on both sides.

Fig. 2

Timeline of the RCC and the unilateral events (Abbreviation: CBO Community-based organization; RCC Rolling Continuation Channel). Source: [78, 84, 85]

The misunderstandings initially arose regarding the concept of ‘consolidation’, which contributed to the complexity of management during the transition period of the Fund-supported programs. Specifically, one vision of the RCC was to consolidate efforts and resources in the previous rounds of the Fund for a smooth transition [78]. The government interpreted this ‘consolidation’ as integrating international resources into the national budget to support government policies [86, 87]. On the other hand, the Fund understood consolidation as employing stricter financial and accountability standards to mitigate risks in program performance before the Fund’s exit, reflecting its nature as a performance-based initiative accountable to its funders [57]. The national government and expert respondents perceived Fund managers as presuming inadequate government attention to corruption and inefficiency in communications with their Chinese counterparts. Consequently, the Fund maintained a separate system for stricter program management, auditing, and reporting, increasing the burden of micro-management [78, 88].

The stricter management imposed by the Fund, combined with the ambiguity surrounding the definition of CSOs and related standards, resulted in a freeze of HIV/AIDS grants [85]. CSO respondents noted that the national government favored government-affiliated organizations, including government-organized non-governmental organizations (GONGOs) and community health centers, contrary to the Fund’s emphasis on community-based organizations (CBOs)Footnote 3 [86]. Due to this ambiguity, several leaders from community-based organizations accused the government of mismanaging the RCC project, complaining to the Fund that government-affiliated organizations received most of the funds allocated to CSOs. The result was a series of “unpleasant disputes” between the Fund and the government, closed meetings between the Fund and community representatives, and the Fund’s unilateral administrative letter reporting mismanagement to the Chinese CDC, the Principal Recipient of the RCC [89, 90]. Although subsequent reviews by the Fund and independent evaluations found no significant mismanagement and fund misuse, they highlighted the Principal Recipient’s compliance problems with CBO selection [57, 78, 85, 89,90,91,92]. As a result, the Fund temporarily suspended and then froze the grants for HIV/AIDS [93]. The government ultimately agreed to ensure community engagement and proper financial management for the grant resumption [57, 77, 90]. This event, however, led to an interruption in the implementation of CBO projects [88]. Consequently, the government lost its reputation, and there was increased mistrust towards the Fund, as reported by domestic respondents.

“Accusing the Global Fund’s project—(the Ministry of Health managed the project)—meant accusing the government, which was humiliating to the government. The government was very uncomfortable that the money was monitored by the Global Fund, who did not provide much money. It [the money freeze] also caused a stir in the international public opinion [towards China], so it was right to close it [the RCC project].” (R26-GF)

As the pressures from Fund’s funders to exit China intensified due to the country’s graduation to an upper-middle-income status [77, 94], the bilateral relationship between China and the Fund further deteriorated [95]. The Fund’s Board made the exit decision without prior consultation with the Principal Recipient or the CCM, and announced this decision in November 2011, stating that China was ineligible for renewals of Phase II grants from 2013 to 2015 [96]. In response to this sudden decision, the CCM HIV/AIDS Working Group and the Fund’s Office of the Inspector General identified risks and proposed mitigation solutions related to CBO funding and service quality [91]. More bilateral discussions at a higher level and frequent visits from the Fund to China also took place [78].

However, due to the requests from Fund funders to reduce funding commitments to China and minimize operational risks, communication between the Fund and the government mainly focused on operational mechanics, budget cuts, and the country’s compliance with Fund agreements and financial standards [78]. On the other hand, the government lost interest in dialoguing with the Fund regarding transitional plans [78]. While the Fund supported transitional investigations for civil society engagement [97], the government unilaterally decided to request no-cost extensions and declined the Fund’s offer of transitional funding [57, 78]. The transition planning was then internally undertaken by domestic actors [